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Savers miss out after last base rate rise

8 September 2018

New analysis from Which? reveals a significant number of banks and building societies hiked their standard variable mortgage rate in line with August’s base rate rise, while the equivalent rise was largely denied to savers.

The consumer champion monitored how banks and building societies reacted in the month that followed the recent (2 August) base rate rise of 0.25% to its current rate of 0.75%. And Which? spotted a trend of a significant amount of standard variable mortgage rates being hiked, while the equivalent benefits were largely denied to savers at the same time.

At the time of the research, Which? can reveal that half (48%) of providers had raised their standard variable rates by the full 0.25%.

Meanwhile, a mere one in six (16%) instant-access savings accounts saw a rise of 0.25% or more. And two thirds (66%) of accounts saw no rate increase at all.

For cash Isas, the picture was equally bleak, with just over one in eight (14%) instant-access accounts passing on a rise of 0.25% or more. In contrast, over two thirds (68%) of cash Isa accounts saw no rate increase at all.

Which? also looked at whether providers that had announced an SVR increase had also passed on an equal rate increase to their instant-access variable savings accounts, either cash Isa or non-Isa.

Out of the 37 providers who raised their SVR by the full 0.25% that also offer the relevant savings accounts, one in five (21%) failed to pass on any benefit at all to savers by 3 September.

Following the previous base rate rise, in November 2017, Which? also revealed a similar pattern of unfair practice, with a significant amount of providers increasing their mortgage rates, while not passing on equivalent benefits to savers at the same time. However, some indicated they intended to do so in the future.

Gareth Shaw, Which? Money Expert, said:

“A significant number of providers have hiked their standard variable mortgage rates, while the equivalent rise has been largely denied to savers. We’ve monitored the last two rate rises and have seen similar unfair practice and double standards on both occasions.

“If some providers are going to raise their mortgage rates then they should reward savers at the same time, otherwise their customers are being penalised. With future rises expected, we want to see fairness across the board.”

Notes to editors

All analysis in this press release uses data sourced from Moneyfacts covering the time period from the 2nd August base rate rise to the 3rd September.

Standard variable rate

Number of providers who upped SVR to date by a full 0.25%: 42

Total providers as of 3rd September: 87

Percentage of providers who have upped SVR to date by a full 0.25%: 48%

Instant-Access Variable Savings Accounts

Number of savings accounts that passed on 0.25% or more: 40 (15.63%)

Number of savings accounts that had no rate increase at all: 170 (66.41%)

Total number of savings accounts at the time of research: 256

Instant-Access Cash ISAs

Number of cash Isa accounts that passed on 0.25% or more: 17 (13.82%)

Number of cash Isa accounts that did had no rate increase at all: 84 (68.29%)

Total number of Cash ISA accounts at the time of research: 123

Out of the 37 providers who raised their SVR that offer the relevant savings accounts, 8 showed ‘double standards,’ by not passing across the equivalent rise to savers (Five mortgage providers who had raised their SVR were excluded from our analysis for various reasons)